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Bidding and mitigation of commitment costs
Shortly after the launch of its new market in April 2009, the California ISO undertook a two-phased approach for changing start-up and minimum load bidding restrictions in order to alleviate the excessive cycling of generating resources and to help generators recoup their commitment costs. Phase 1, implemented in July 2009, enabled generation owners to modify their start-up and minimum load elections and to switch between the registered and proxy cost options more frequently. Phase 2 was initially proposed to implement 1) frequent start-up and minimum load cost bidding and 2) a mechanism for use-limited resources to capture opportunity costs.
- Outcome
  The ISO changed the gas delivery point from SoCal Border to SoCal CityGate to allow generators located in the fuel regions south of path 15 to take advantage of the natural gas price representative of the fuel costs. Additionally, on April 1 the ISO modified its Master File and Scheduling Infrastructure and Business Rules (SIBR) systems to allow 1) independent election of cost options (proxy or registered) for start-up and minimum load costs and 2) daily bidding of these costs for resources electing the proxy cost option provided that the submitted bid is positive and less than or equal to the calculated proxy cost value. The April 1 changes allow resource owners to recover their operating costs in a more efficient manner. Another outcome of Phase 2 is a commitment by the ISO to implement a re-evaluation of the operations and maintenance cost adder used for proxy minimum load costs and default energy bids. This re-evaluation will take place every three years with the first update targeted for Apr 01, 2012 implementation. — Implemented: Apr 01, 2011; FERC Order: Mar 31, 2011 (ER11-2760); Board of Governors decision: Jul 26, 2010
- Bidding and mitigation of commitment costs - papers and proposals